Building for sale or let.
WHAT IT INVOLVES
Acquiring land Obtaining approvals Designing Building Selling or letting
WHAT IT REQUIRES
Substantial capital, held through a long period with no income.
WHY THAT IS THE CENTRAL DIFFICULTY
Costs run for the whole project and revenue arrives at the end.
WHAT TO ESTABLISH BEFORE ACQUIRING LAND
Title, thoroughly Whether the intended use is permitted What approvals are required Ground conditions Access and services
WHY SERVICES MATTER
Water, power and drainage determine feasibility and cost.
WHAT APPROVALS TYPICALLY INCLUDE
Planning or building approval from the relevant authority Environmental approvals, for larger projects Compliance with development control regulations
WHAT BUILDING WITHOUT APPROVAL RISKS
Demolition, penalties and inability to sell.
WHAT TO BUDGET
Construction cost Professional fees Approvals Finance Contingency
HOW MUCH CONTINGENCY
Substantial, because construction overruns are normal.
WHAT COMMONLY CAUSES OVERRUN
Design changes Material price movement Delays Ground conditions Poor contractor performance
WHAT TO CONTROL
Design changes, which are the most common cause.
HOW
Freeze the design before starting.
WHAT TO ESTABLISH ABOUT CONTRACTORS
Their record, their capacity and their financial stability.
WHAT TO STRUCTURE
Payment against verified progress.
WHAT TO NEVER DO
Pay substantially in advance of work completed.
